Replies to This Discussion

Permalink Reply by Skip Peel - Mineral Consultant on May 5, 2012 at 3:33

Thanks for your estimates, Les.  With unknown EUR I have been looking for IP rates closer to 500 BOPD to give a conservative benchmark for profitability in a less than best case scenario.  I find it curious, as has been pointed out by Jim York, that SWN is significantly reducing the lateral length in their BLM well along with an increase in frac stages.  I am unfamiliar with any horizontal completions with stages of so short a distance.  It does sound like making a sand pile.  And a more expensive well.

Permalink Reply by Bill Dailey on May 5, 2012 at 5:47

Skip, in response to a question from analyst Amir Arif during yesterday's conference call, Steven Mueller explained the reason for the BML wells' shorter-than-planned lateral.   It has to do with problems that arose from the "kick" and the higher-than-expected pressure.  The larger number of fracks has to do with "science" they've planned, according to Mueller.  That particular Q&A is almost half-way down the page on this link:

http://seekingalpha.com/article/561911-southwestern-energy-s-ceo-di...

Permalink Reply by Skip Peel - Mineral Consultant on May 5, 2012 at 6:08

Thanks, Bill.  I'll make time over the weekend to read the full presentation and Q&A.

Permalink Reply by L Davis on May 5, 2012 at 6:24

In his answer to Amir Anif of Stifel, Nicolaus & C0, Mueller stated that they ran pipe and went to a smaller bit and that about 4000 feet was the physical capability of that setup.   Can anyone explain the technical limits of the smaller bit?

Permalink Reply by michael magness on May 7, 2012 at 21:17

well smaller bit which  means smaller diameter hole and the smaller hole size forces you to use a smaller o.d. drill pipe which is alot weaker so they cant push as far for fear of twisting off the drill string  

Permalink Reply by L Davis on May 8, 2012 at 2:06

Thanks Michael, I thought this might be the case.  Also, the bit and drill pipe are going inside another pipe and wonder if there was less clearance between the hole wall  and smaller drill pipe than the clearance between a standard bit hole wall and standard drill pipe.  If what I have described is true, then I can also see that the smaller bit and pipe would be easier to get stuck.  Does the smaller hole have any negative affect on fracking, completing, and production?   Anyone know the small bit widith and small pipe diameter size?.

Permalink Reply by Ed on May 5, 2012 at 7:31

And the Kick was an oil kick  not gas.

Permalink Reply by Les Bamburg on May 6, 2012 at 5:39

Ray, your observation is not supported by facts or the financials.  SWN's natural gas pricing for 2012 is ~ $3.50/Mcf including the hedging uplift.  The is about $0.90/Mcf above their all-in cost resulting in positive net income from their drilling activity.

Permalink Reply by Lee Max on May 6, 2012 at 9:58

Les B, you are right on again. Vague, negative and generally ignorant statements are a waist of time.  

Permalink Reply by michael magness on May 7, 2012 at 21:19

thats actually kind of encouraging true oil kicks are quite rare anymore in the patch  normally kicks are gas

Permalink Reply by Les Bamburg on May 6, 2012 at 3:38

Skip, the primary reason for the shorter lateral was an unforeseen high pressure area of the LSBD play.  This required an extra unplanned casing string.  This high pressure are had not been encountered in any of the previous vertical wells.  If this would have been known the well would have been designed in a manner to allow for a longer lateral.  SWN plans additional wells to determine if the high pressure region is limited in areal extent.

 

Generally the analyst call was upbeat and SWN should be able to make a long term judgement of the play's viability by end 2012.  

Permalink Reply by Skip Peel - Mineral Consultant on May 6, 2012 at 3:47

Yes, as mentioned above, I later made time to read through the entire Q&A portion of the conference call.  Good questions and interesting answers. Based on the pace of exploration activity I have mentioned several times over the past months that we should have a much better opinion of the economics of the prospect by year's end.  And I have mentioned on a number of occasions that I think SWN will make a play of the Brown Dense.  The questions unanswered are just where and over how extensive an area.  I think SWN is beginning to focus on a couple of specifics that should drive their next moves and help to answer those questions.

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